1128

The second mental state requirement of § 1831 is that the
defendant
knew that the offense would "benefit" a "foreign government, foreign
instrumentality, or foreign agent." The term "foreign instrumentality"
means:
any agency, bureau, component, institution, association, or any legal,
commercial, or business organization, firm, or entity that is substantially
owned, controlled, sponsored, commanded, managed, or dominated by a foreign
government. 18 U.S.C. § 1839(2). The term "foreign agent" means: any
officer, employee, proxy, servant, delegate, or representative of a foreign
government. 18 U.S.C. § 1839(1). Thus, the government must show that
the
defendant knew or had a firm belief that misappropriation would benefit a
foreign
entity. When this "entity" is not, per se, a government entity (e.g., a
business), there must be evidence of foreign government sponsorship or
"coordinated intelligence activity." 142 Cong. Rec. S12201, S12212 (daily
ed.
Oct. 2, 1996)

The legislative history of the EEA indicates that "benefit" is to
be
interpreted broadly and is not limited to an economic benefit, but includes
a
"reputational, strategic, or tactical benefit." H.R. Rep. No. 788, 104th
Cong.,
2d Sess. (1996).

The requirement that the benefit accrue to a foreign government,
instrumentality or agent should be very carefully analyzed. In order to
establish that the defendant intended to benefit a "foreign
instrumentality," the
government must show that the entity was "substantially owned, controlled,
sponsored, commanded, managed or dominated by a foreign government." 18
U.S.C.
§ 1839(1). The EEA does not define "substantially," but its use
suggests
that the prosecution does not have to prove complete ownership, control,
sponsorship, command, management or domination. The legislative history
states:

substantial in this context, means material or significant,
not
technical or tenuous. We do not mean for the test of substantial control to
be
mechanistic or mathematical. The simple fact that the majority of the stock
of
a company is owned by a foreign government will not suffice under this
definition, nor for that matter will the fact that a foreign government only
owns
10 percent of a company exempt it from scrutiny. Rather the pertinent
inquiry
is whether the activities of the company are, from a practical and
substantive
standpoint, foreign government directed.

142 Cong. Rec. S12201, S12212 (daily ed. Oct. 2, 1996).

Thus, § 1831 does not apply where a foreign corporation misappropriates
the
trade secret and there is no evidence of sponsorship or "coordinated
intelligence
activity" by a foreign government. Id. at S12213. In such an instance,
however,
the foreign corporation could still be properly charged under
§ 1832.